Considering investing in student accommodation? Having built an impressive reputation for both sourcing and managing student investment property in Liverpool, Salford, Manchester, Bolton and many other areas, the Mistoria Group team can help you to decide whether this type of property investment is right for you.
Find out whether student letting is a good investment opportunity as we explore both its benefits and profitability below.
Is student letting profitable?
Making students your target tenant is a lucrative and profitable property investment decision for many reasons. First, students will always require accommodation, and once they have started their tenancy, you’ll be able to benefit from at least a year’s worth of rental income while they study. Coupled with high rental yields and affordable management fees, student accommodation is widely recognised as one of the most profitable areas of property investment.
Is it a good investment to buy student accommodation?
The significant rental yields for student accommodation and HMOs (Houses of Multiple Occupation) are typically much higher than those for standard BTL (buy-to-let) properties. Add these excellent returns to the strong market demand for student accommodation, and investing in this type of property seems like the obvious choice.
According to the UK Parliament’s House of Commons Library, the number of students at UK higher education institutions reached record highs in 2020/21 at 2.66 million students. This highlights the growing demand for student accommodation, often in the form of buy-to-lets or HMOs.
By satisfying this high and consistent need and investing in student housing, landlords and investors could stand to benefit from more impressive returns in addition to many other perks.
What are the benefits of investing in student property?
- Strong demand
With student numbers reaching record highs, it makes sense to tap into this growing market to meet the substantial demand for affordable student housing in a convenient location. No matter the state of the economy, students will always require accommodation (especially given the critical shortage of student housing in many cities), ensuring you have a dependable market.
- High rental yields
Boasting impressive rental yields, it’s no wonder that student housing is a lucrative area of property investment to explore. To be more specific, one of the most attractive aspects of student property investment is that it commonly delivers anywhere between eight and ten per cent NET returns, allowing investors to cover mortgage costs as well as profit from the additional rental income.
- Zero rental void periods
As mentioned above, one benefit of investing in student property is the reduction or even elimination of rental void periods. The strong and consistent demand for student housing often works on a yearly basis. As a result, you’ll be able to line up the next set of tenants before your current tenants have even come to the end of their contract. In some cases, these tenancies can be even longer with students applying for three or four-year courses with practically zero void periods.
- Longer tenancies
Students will often agree to a tenancy period of anything from 6 to 12 months with the option of extending this period towards the end of the tenancy. In some cases, however, students will agree to rental periods of one year or even longer. Subsequently, you’ll need to exert less time, money and energy finding replacement tenants.
- No stamp duty
While some exceptions do apply, The Finance Act 2016 ensures that investors won’t need to pay Stamp Duty on properties purchased below £125,000. With many entry-level student housing costs below this figure, investors will be able to enjoy this financial saving.
- Reliable tenants
Students seeking accommodation are typically supported by either guarantors or money from their student loans. This gives landlords and investors the peace of mind that they won’t be chasing their tenants for rent even if they fall behind now and again.
Best places to invest in student accommodation in the UK
Searching for some of the best student property investments in the UK? Bustling cities known for their wide range of universities and higher education courses are often the best place to seek out student property investment opportunities. This includes prime locations such as Manchester, Salford, Leeds, Sheffield, Liverpool and Birmingham.
You should also keep an eye out for any cities that suffer from a critical shortage of student accommodation. Demand has been so great in areas like Bristol, Edinburgh, Exeter and Bath, for example, that students have chosen to defer their studies or even seek hotel accommodation in lieu of finding suitable student housing. This creates an exciting opportunity for student property investors to convert local properties into suitable student housing.
Wherever you choose to invest in student accommodation, it’s important to remember the wants and needs of your target tenant. This typically includes easily-accessible public transport links (trains, buses, etc), close proximity to essential amenities (university campus, food shops, pharmacy, etc) and the overall affordability of the area.
Struggling to find the perfect student housing location? If you require expert advice and guidance in finding the right location to invest in student property, then look no further than the experienced team at The Mistoria Group. As one of the leading property companies in the North of England with more than 100 years of industry experience, we can help you to choose the best location for your next property investment venture!
Student property investments and management at Mistoria Group
Keen to add to your investment portfolio? Why not explore the highly-profitable investment avenue of student property with the experienced and professional team at Mistoria Group? For smooth and hassle-free student property management or sourcing, please don’t hesitate to speak to one of our informative agents today. You can either get in touch over the phone by calling 0800 500 3015, emailing our team at email@example.com or using our convenient online contact form to discuss your investment requirements or property enquiry!